Artificial Intelligence: Catalyst Behind The Fourth Industrial Revolution by Zak Gardezy, CFP®
The First Industrial Revolution, beginning in the late 18th to early 19th century, originated in Britain and was characterized by the transition from hand production to mechanical manufacturing using steam and water power. Notable technologies of this era included the spinning jenny, used for spinning wool and cotton, and the steam engine. These advancements propelled the textile industry to new heights and fundamentally changed global industry and daily life.
The Second Industrial Revolution, also known as the "Technological Revolution," occurred from the late 19th to early 20th century. This period saw the emergence of key technologies such as the telephone, internal combustion engines, and widespread adoption of electrical power. Additionally, industries like steel and petroleum expanded immensely due to mass production methods and the refinement of previous processes with modern technology, permanently altering society.
Moving on to the Third Industrial Revolution, which took place in the late 20th century and is often referred to as the "Digital Revolution," was a period when technology shifted from mechanical and analogue to digital. During this time, significant innovations such as the personal computer, the internet, and global information and communication systems emerged.
We are currently experiencing the Fourth Industrial Revolution, which began in the 21st century. This era is marked by the fusion of technologies that blur the lines between the physical, digital, and biological spheres. Key technologies include robotics, the Internet of Things (IoT), 3D printing, genetic engineering, and quantum computing. A notable initiative is Neuralink, which aims to integrate the human brain with computers. Each Neuralink device, featuring a chip and over 1,000 ultra-thin, flexible conductors, is surgically inserted into the cerebral cortex by a robot. These devices are designed to detect neural patterns associated with movement and, as envisioned by Elon Musk, could one day allow users to control devices through thought alone.
As we witness the rapid progression of the Fourth Industrial Revolution, it's evident that technological advancements are accelerating. Ray Kurzweil's "Law of Accelerating Returns" suggests that each generation of technological advances builds on the previous, leading to exponential growth in technological progress. Although this theory is not universally accepted across all industries, its implications are particularly noticeable in the technology sector. For perspective, modern smartphones, which we mainly use for Candy Crush and FaceTime, are significantly more powerful than the computers used for the Apollo 11 moon landing and the Cray 1 and Cray 2 supercomputers used during the Cold War for a variety of critical applications, such as nuclear research and weapons simulations, weather prediction and analysis, physics, and more.
Jokes aside, the technology that must not be overlooked is Artificial Intelligence (AI). Long before its widespread public adoption, engineers recognized the potential societal impacts of AI. For those unfamiliar with the term, Ilya Sutskever, Co-Founder and Chief Scientist of OpenAI, the creators of Chat-GPT, one of the world’s leading artificial intelligence systems, defined A.I. as being digital brains within large computers. Jensen Huang, CEO of Nvidia, arguably the global leader in artificial intelligence computer chips, explained that traditional software solves problems through coded instructions that computers follow. In contrast, Machine Learning, a subset of AI, involves training models on large datasets to recognize patterns and make decisions independently, using algorithms that enable the system to learn and improve over time.
AI is now being used across various industries. A few examples, it helps influencers and creators draft new video content ideas, enables scientists to process and interpret vast amounts of research data, assists doctors in navigating extensive medical databases, and supports students in improving their writing and understanding complex mathematical concepts. The potential applications of AI are virtually limitless, and as access to this technology expands, it is poised to rapidly advance human capabilities globally.
Imagine a business leader planning to expand operations from one country to another, overcoming language and cultural barriers with AI-powered training programs. Or consider a nation's president, leveraging AI to revolutionize an education system and rapidly elevate the quality of education without the extensive resources typically required.
The investment in AI by leading tech companies like Nvidia, Microsoft, Meta, Alphabet, Tesla, Apple, Amazon, and others, underscores its significance. These companies are not merely adapting to a new technological landscape; they are shaping it, striving to be at the forefront of providing the most advanced AI tools.
For those looking to understand the direction in which the world is heading, following the investment trails in AI is enlightening. At Wealthstone, we strategically position client portfolios to capitalize on the technological advancements AI is expected to bring. We utilize forward-thinking analysis to craft investment strategies that are cost-effective, tax-efficient, and appropriate for our clients' risk profiles. Our comprehensive wealth planning discussions help determine the optimal allocation of investments across stocks, bonds, and alternative investments like private equity, credit, and real estate.
For more insights into how these technological advancements can be incorporated into your investment portfolio and overall financial plan, please reach out by using either button below.
Zak Gardezy, CFP®
Founder & Managing Partner
Wealthstone Private Wealth Management
